Two House Democrats have asked the Corps of Engineers to cancel the waiver it has given to Halliburton Co.'s KBR unit to certify cost and price information on fuel imported to Iraq from Kuwait. Halliburton said in a Jan. 6 statement that the Corps had issued the waiver on Dec. 19 of the certification requirement of data from KBR's subcontractor. Providing fuel for Iraqi civilian use is one element of a contract that Halliburton's KBR unit has with the Corps to rebuild Iraqi oil infrastructure.
In early November, the Corps asked Halliburton to increase deliveries of fuel and add kerosene, says Ross Adkins, Corps spokesman in the Dallas office. "Turkey was giving us as much as they could, Saudi Arabia was too far away, so we asked them to go back to the Kuwaitis and get another source," he says. Under federal acquisition regulations for a sole-source contracts, Halliburton is required to provide cost and price data. But the Kuwaitis refused to do so, citing their own national security, according to a memo from Lt. Gen. Robert Flowers, Corps commander. The Corps determined that keeping fuel flowing into Iraq superceded the need for cost and price data. A waiver was granted.
But the congressmen, Henry A. Waxman (Calif.) and John D. Dingell (Mich.), for weeks have been criticizing Halliburton for the prices it has billed for that fuel from Kuwait. On Jan. 6, they wrote Flowers, urging him to rescind the waiver.
Waxman and Dingell called the waiver action "incomprehensible," and contended that unless officials at the Defense Contract Audit Agency can get the data from KBR "the contracting officer has little way of determining whether the taxpayer is being overbilled, and DCAA will have its hands tied as it tries to complete its audit."
Halliburton defended its handling of the contract, saying that "the facts show that KBR delivered fuel to Iraq at the best value, the best price and the best terms and in ways completely consistent with government procurement policies."
The first source of imported fuel was in Kuwait, Halliburton said, but added that it brought up the idea of also obtaining fuel from Turkey, which it says saved the U.S. "well over $100 million." The company says Turkey now provides about two-thirds of the fuel imported to Iraq, which "maxes out" the Turkish source's capacity. Kuwait provides the other third of the fuel.
The Defense Dept. said on Dec. 30 that it will shift the Iraqi fuel program to the Defense Energy Support Center. DESC is sending a five-person team to Iraq this month to meet with Task Force RIO (Restore Iraqi Oil) and the Iraqi Oil Ministry. Solitications for new supply contracts will be issued as quickly as possible, according to the agency, which supplies fuel to U.S. armed forces worldwide. The transition from the Corps top the DESC is expected to take place within 60 to 90 days, according to the Corps and DESC.